Culture Club

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Franklin Delano Roosevelt’s first vice president was John Nance Garner. Like many of his fellow Texans, he was a straight shooter. Direct and unfiltered. And he wasn’t fond of his job. Pondering his time as VP, he said he had “spent eight long years as Mr. Roosevelt’s spare tire.” He summed it up declaring that “the Vice Presidency isn’t worth a pitcher of warm spit.”

Another of Garner’s famous quips was “the trouble today is that we have too many laws.” An evergreen sentiment, it seems. There certainly are a lot of laws in the business world. There are federal, state, and local laws, and plenty of rules and regulations regarding accounting, employment, safety, and the environment. It’s not hard to understand where Mr. Garner was coming from.

Beyond the legal framework, there are the dozens of eponymous laws, the adages, principles, and maxims that are named after someone. Like Murphy’s law: everything that can go wrong, will go wrong. Wikipedia lists almost 200 of these gems. There’s Occam’s Razor: the simpler solution is preferrable. And a recent popular favorite, the Dunning-Kreuger effect: which notes that unskilled people are inclined to overestimate their knowledge.

In the leadership world there’s the Peter principle: every employee rises to their level of incompetence. When it comes to getting things done, it’s Parkinson’s law: work expands to fill the time available. In the compensation world Goodhart’s Law is often cited: when a measure becomes a target, it ceases to become a good measure. And in the online world, there’s Godwin’s law that states that the longer an internet discussion goes on the likelihood of someone referencing Nazis or Hitler approaches certainty. 

When it comes to the output of an organization, few are more succinct and accurate than Melvin Conway. Conway is a legendary computer scientist active in the field for over 50 years. In 1967 he observed that the product of an organization is a copy of the communication structure of that organization.

Though Conway was referring to software, the principle applies far more broadly, to almost every business and organization. Simply put: you ship your culture. Regardless of your product or service, your industry or medium, the output reflects the culture that built it. And that’s what this is all about.

This is Leading Smart, the show about Managing in the Brainpower Age. It’s a field guide to the joys and challenges of leading and working in the modern workplace. I’m Chris Williams, your guide to the stories and ideas that I hope will inspire you to be a better leader in the world of knowledge work.

This episode begins a series on organizational culture. We begin by examining what makes up the culture of a workplace. This is Episode 233 ­– Culture Club.

I was confused about what organizational culture is for over thirty years. 

When I first did summer jobs, I was treated as if I was disposable, and most organizations I saw were pretty terrible workplaces. Whether it was construction or factory work, I did my best to get along. I tried hard to be a member of the club. Even though the mood and work ethics were often toxic.

When I worked for Burns Security both in the summer and while at the University of Michigan, everyone was a criminal, both the people we were protecting against and the employees. Behind the uniforms and the militaristic structure was a stench of: trust no one. It made for a pretty depressing workplace.

When I worked for the car stereo company, as I noted way back in episode one, the store manager was a huge, loveable guy who laughed and drank his way through the day. Work was fun, we treated our customers with the same attitude, and even though I had to fire a lot of people, it was a great place to work.

At Fox Software, there was excitement in the air. The momentum was palatable, we were building great software and it was getting noticed. Even the bellowing of a demanding boss couldn’t kill it entirely. Yet, it was interesting to see how the mood changed depending upon the presence or absence of a single person.

But it wasn’t until I got to Microsoft that I started to draw the connection between a team’s culture and its output. My role as Director of Development, responsible for company-wide best practices, gave me a unique perch. It let me see the entire breadth of the many teams and I could draw a fairly straight line from culture to product. The Windows team had a raw culture that worked hard and played hard. The products reflected that boy’s club tone. The Office team was all business and process, much like their products and their customers. The nascent games and consumer group was jovial and fun, often bumping against the more hardcore tone of the rest of the company.

My best practices research made clear there was a general ethos to the larger organization, and yet each leader, product, even target market, helped define the individual culture of a team. Further, the match between organizational culture and market was a fairly accurate measure of success. When the match was good, so was outlook for the product.

This was drawn in crystal clarity with the release of Windows Vista in early 2007. Though a reasonably solid release technically, it was complex and often confusing for the customers. It presented a number of obtuse messages to users, and as a result got terrible reviews. Though it sold well, it was deemed a market disaster.

In the aftermath, Microsoft Research did some statistical analysis to understand why. They looked at a broad range of metrics: lines of code, number of feature changes, and so on. The only significant correlation was with the internal organizational structure of the team. They eventually released a study entitled “The Influence of Organizational Structure on Software Quality”. They concluded, that indeed, you ship your organization. Your product reflects your culture.

Matching the culture to the market is simply good business. Many organizations do it instinctively. Luxury goods salespeople dress the part and endeavor to speak and act like their potential clients. Automotive repair equipment salespeople dress in shop uniforms and often tell bawdy jokes to endear themselves to their customers. It simply works to be a part of the club and sell more products. In some cases, it even carries back inside the organization. IBM famously adheres to a very strict business attire requirement even for people far removed from their customers. The club, it seems, extends deep into the clubhouse.

The effect goes well beyond dress codes. Organizations involved in deeply technical or scientific work tend to more process and metrics-heavy operations. Those with close connection to the military tend to mirror those kinds of rigid organizational structures. And those in more creative fields tend to have not only looser dress standards but also more relaxed cultures in general.

This raises an interesting chicken and egg question. Do organizations bend and shape their cultures to match their target market? Or does the target market tend to favor organizations with cultures that match? I think it’s the latter.

The first multi-national corporation, the Dutch East India Company, was formed in 1602. Borne from the Dutch military, the company brought discipline and rigor to the otherwise ramshackle and pirate filled world of international shipping. The culture was strict and meticulous all the way down to the formation of some of the accounting rules we take for granted today. The shipping world it seems needed and rewarded the well-formed structure. The company rose above its myriad competitors to dominate shipping for almost 200 years.

In the middle of the 20th century, IBM was a highly disciplined business that excelled in selling to like-minded large organizations. Their strait-laced customers appreciated the staid and stable company. The standard quip was “nobody ever got fired for buying IBM”. It too dominated their industry for a time, only faltering as the pace of change in tech outpaced it.

But the clearest example of the market favoring a culture is Amazon. There were a number of companies in online commerce during the great dot com boom of the 1990s. Many were funded by enormous investments and very public IPOs from the heart of Silicon Valley. Yet Seattle’s Amazon went from what was first termed “earth’s biggest bookstore” to become “earth’s biggest online retailer”. By far. What made Amazon successful when others were spectacular flops?

At the time of Amazon’s birth, online commerce was hard. Web sites were tricky to build, and they were often unreliable, easily overwhelmed. Processing transactions online was complex and risky. Shipping goods at scale required infrastructure and to do it efficiently was hard. A consistent theme from analysts for Amazon’s first many years was to wonder when or even if it would ever turn a profit.

But Amazon has an execution-first culture. One that obsesses over details, that presses hard against the numbers, and that doesn’t give up easily. They were relentless in driving the performance of the website, they hammered on the reliability of the transactions, and their shipping operations were finely tuned. They even built their own web services business to such a scale that it’s one of the more profitable parts of the company.

Talking with people at Amazon, it’s clear that the culture drove their rise. Jeff Bezos led the culture of execution, and that in turn bred success. They didn’t as much transform to meet the needs of the market, as the market favored a company with their culture.

To be clear, it’s not just structure and rigor that wins. Southwest Airlines is very successful with a much more relaxed culture where everyone, from the CEO on down, delights in a humorous, often self-deprecating environment. Southwest is hardly dominant, but they have weathered many of the ups and downs of their industry far better than much of their competition. Being a part of their club makes their employees and their company more resilient.

All of this begs the question, what is organizational culture?

Many mistake the trappings or processes of a culture for the culture itself. They see foosball tables and free soft drinks and think they are the culture. They think great pay or perks are the hallmarks of a good culture.

They often see processes or structures and mistake those for culture as well. Salesforce has their V2MOM: “vision, values, methods, obstacles, and metrics” that they set and measure for every employee. Amazon has their Leadership Principles that they constantly refer to in hiring, evaluating performance, even casual conversation. Google has their KPIs, the key performance indicators, that are on big screens everywhere. Sales organizations routinely set, track, and measure sales quotas in a huge variety of ways. Because these tools are everywhere in these companies ­many people confuse them for the organization’s culture. But they are a reflection of the culture, they are not what defines it.

No, what makes up a culture is how people treat each other. How the leaders lead, how the employees interact with each other, and how the company, as an entity, treats everyone. It’s reflected in the thousands of small behaviors, both good and bad.

Apple has secrecy as a core element of its culture. Getting an Apple employee to talk about their work is practically impossible. Even within the company, teams interact on a completely need-to-know basis. On the plus side, this environment makes teams very close knit with deep reliance on each other. Every team feels like a private club. On the negative side, the endemic lack of trust of outsiders, both inside the company and out, can be draining and even corrosive.

Microsoft in the 90s, as has been discussed here before, a very aggressive culture. With lots of personal challenges between people and with conflict sometimes even intentionally designed into organizational structure. It’s where I first heard references to a “chair throwing meeting”. That culture placed high stakes on being right and resulted in breathtaking growth. Here too, feeling like being part of this club was exhilarating. Yet it also was hard for many to endure.

Virtually every culture has its benefits and its drawbacks. A gentile culture frequently is risk averse. A brutish culture is toxic. A loose culture can make mistakes. A rigid culture lacks empathy. For every benefit, you can find a missed opportunity, or a person for whom it doesn’t work well. Every club, it seems, has those on the outside.

One of the constants in life is change. And so it is with organizations as well. They grow and shrink. They outsource IT, or accounting, or HR, only to years later bring it back in house. They structure the organization based on product lines only to decide within a few years to base it on job function. Then swap it organize by target customer. Then by geography. Then back to product lines.

This pendulum of organizational change is often healthy. Each shift affords new perspectives. Costs and communication structures get re-examined in new ways. At the very least it keeps people entertained.

Less common, however is a change in culture. Some elements of organizational culture seem to get more and more baked in, more resistant to change, over time. Old habits die hard. And yet organizational cultures can and do transform.

Culture change doesn’t tend toward the cyclical like org chart changes often are. But it does happen. One of the most common reasons for a change in culture is in response to a shock. Some major upheaval at the company or in the industry. A radical disruption in the market. Or some major scandal that rocks the organization to the core. These kinds of cultural overhauls are much like an addict going through an intervention. Something simply has to change for the organization to survive.

Cultures can also change, though, from within and by choice. By the organization simply deciding change is in order. This sort of change takes time and hard work. A concerted effort often achieved through bold leadership.

Next time we’ll talk about how culture changes. About who has the power to change it. About the levers that work and the ones that don’t. Then in a future episode we’ll talk about exactly how you can change your organization’s culture.

But that’s next time. For now, remember that the culture of your organization is the sum of the interactions of the people. And that you ship your culture. To make the best product, to provide the best service, you need the best culture.

Leading Smart is from me, Chris Williams. You can find out more about the show and discover other resources for leaders at my web site

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That’s it for this episode. The next episode is another of my conversations with leaders. We’ll talk with David Sobeski. David has worked for an array of companies, from Microsoft and Yahoo to Disney and Nordstrom. He’s seen a range of cultures and gives us a peek. I hope you’ll listen. Until then, please remember that each of the several dozen decisions you make today are part of Leading Smart.